I. Field of the Invention
The present invention relates generally to systems, methods, and computer program products for purchasing corporate stock at a price below the industry-standard Volume Weighted Average Price (VWAP).
II. Description of Related Art
Publicly held companies often engage in common stock repurchasing programs, also known as buyback programs. Repurchasing programs provide an important function of minimizing uncertainty, and therefore, are vital to public companies and the securities markets generally. There are numerous benefits to such programs, such as minimizing dilution to public stockholders as a result of equity-based employee benefit plans, providing a more tax-advantageous way under tax law to return capital to stockholders than paying a dividend, and providing liquidity in extreme market declines. In conducting repurchasing programs, many companies seek to comply with Rule 10b-18 of the Securities Exchange Act of 1934, which establishes a non-exclusive safe harbor to avoid claims of market manipulation based on the manner, timing, price, and volume of their purchases. While not necessarily material for purposes of the present disclosure, Rule 10b-18 strictly defines the mechanics of how repurchasing programs are conducted with regard to manner, time, price, and volume of the purchases.
When conducting a repurchasing program, it is recognized that there are clear advantages of buying a stock at or below the Volume Weighted Average Price (VWAP). VWAP is a well-known trade evaluation benchmark. VWAP can be calculated, for example, by adding up the dollars traded for every transaction (price times shares traded) for a particular stock within the desired time period (e.g., a day), and then dividing by the total shares traded for that time period (e.g., a day). It is believed by many that if a stock is purchased at a price that is equal to the VWAP over a significant period of time, then the buy is considered to be successful. It has been determined by the present applicants that many institutions are comfortable with their repurchasing efforts if their buys match the VWAP price for the stocks of interest over a specified time period.
Thus, there exists an unsatisfied need in the industry for a means to consistently purchase corporate stock at a price below the industry-standard VWAP.